Federal prosecutors are using the recent Bitcoin Fog appellate ruling to strengthen their argument that Roman Storm was properly prosecuted in Manhattan over activity involving Tornado Cash. According to the DOJ’s October 5 supplemental filing, the government says the D.C. Circuit’s decision supports venue in the Southern District of New York for Storm’s money-laundering and unlicensed money-transmission conspiracy counts. The filing comes while Judge Katherine Polk Failla continues considering Storm’s post-trial motion for acquittal.
The government’s argument relies on United States v. Sterlingov, decided September 25. In its 38-page opinion affirming Roman Sterlingov’s convictions and 150-month sentence, the D.C. Circuit held that Washington, D.C., was a proper venue for charges involving Bitcoin Fog even though Sterlingov was not physically operating the mixer there. Transactions between the service and users located inside the district were sufficient under the facts and statutes at issue.
Manhattan Tornado Cash Use Becomes the Venue Hook
For Storm’s money-laundering conspiracy charge, prosecutors pointed to testimony from Shakeeb Ahmed, who said he accessed Tornado Cash from his Manhattan apartment. They argued that his deposits increased the anonymity set available to other Tornado Cash users, thereby contributing to the alleged concealment function of the pools. The government says even funds left inside the mixer for only a few days can further an alleged conspiracy by expanding the pool through which transactions are obscured.
That reasoning closely tracks the Bitcoin Fog case. An undercover federal agent deposited roughly $250 of Bitcoin from Washington and withdrew almost all of it the following day. A second transaction was also withdrawn within days. The D.C. Circuit nevertheless concluded that transfers to and from Bitcoin Fog could further its ability to launder funds for users generally. Prosecutors now argue that Ahmed’s similarly short-lived Tornado Cash activity provides an analogous geographic connection to Manhattan.
For the unlicensed money-transmission count, the government points to another part of the appellate decision: the D.C. Circuit found venue sufficient because Bitcoin Fog served customers located in Washington. Prosecutors argue Ahmed’s testimony establishes the equivalent fact for Tornado Cash in New York. Judge Failla has not yet accepted that analogy, and the D.C. Circuit ruling is persuasive rather than binding authority in the Second Circuit.
The dispute fits a broader unresolved boundary around non-custodial software. A recent Samourai Wallet case involving unlicensed money-transmission liability has kept developer exposure in focus, while the THORChain compliance debate highlights how control, fees and operator conduct can change the legal analysis. The Sterlingov decision does not establish a general rule that software developers are criminally responsible whenever users misuse privacy technology. Its venue holdings turn on the particular conduct and statutory elements before that court.
Chainalysis Ruling Is Separate From DOJ’s Venue Argument
The Sterlingov opinion also addressed Chainalysis Reactor, but that part of the decision is analytically separate from the DOJ’s new Storm filing. Sterlingov challenged expert testimony based on Reactor because its clustering methodology was not peer-reviewed and the witnesses could not provide known false-positive or false-negative rates. The D.C. Circuit nevertheless held that the trial judge did not abuse her discretion in admitting the experts’ testimony under Federal Rule of Evidence 702.
The court cited other indicators of reliability, including industry and law-enforcement use, corroboration from other sources and testimony explaining Reactor’s underlying heuristics. It also upheld restrictions surrounding access to the software’s source code. That decision strengthens the government’s position when blockchain-analysis evidence faces Daubert challenges, but the October 5 Storm letter does not invoke Reactor as evidence establishing Manhattan venue.
Storm’s procedural position remains unresolved. A jury convicted him in August 2025 of conspiring to operate an unlicensed money-transmitting business but deadlocked on money laundering and sanctions-conspiracy charges. Judge Failla has yet to rule on his Rule 29 motion, and her August 25 order moved any retrial of the unresolved counts to April 26, 2027. The immediate significance of Sterlingov is therefore narrower than a new rule for mixer liability: prosecutors have gained recent appellate authority supporting their venue theory while the court still decides whether Storm’s existing conviction and remaining charges can survive his acquittal motion.
